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The Origins of the Net Neutrality Debate

Telecommunications companies and their suppliers have been nursing dreams of tier pricing for years.

July 8, 2006

On June 28, the Senate Commerce Committee rejected amendments that would have built a ban on tiered pricing for Internet access into the big telecommunications bill Congress is trying to pass this session. It was a big blow for “net neutrality” advocates, who argue that if the major cable and telephone companies are allowed to sell certain customers faster Internet connections, those who can’t afford the new tolls will be relegated to the slow lane.

For all the fuss, however, net neutrality was a non-issue one year ago. In the July 7 issue of the National Journal, senior writer Drew Clark asks how the prospect of tiered Internet access suddenly became a focus of public and Congressional debate. He traces the origins of the debate to a few revealing remarks by Ed Whitacre, the CEO of the company then known as SBC (and soon to become AT&T), suggesting that the company was eager to start charging big customers more for access to the company’s Internet backbone connections.

It’s true that Whitacre’s statement raised the alarm among heavy Internet users – but Whitacre was hardly the first to think of turning the Internet into a toll road.

In excerpts from his article reproduced on his personal blog, Clark points to Whitacre’s interview with reporters from Business Week, published at the end of October 2005:

In the interview, which had taken place back in September, Whitacre displayed his usual aggressive style. Asked about Google, Microsoft, and Vonage - all big Internet companies that use broadband to transmit video, software, and telephone calls - Whitacre said, “They don’t have any fiber out there. They don’t have any wires. They don’t have anything. They use my lines for free—and that’s bull. For a Google or a Yahoo! or a Vonage or anybody to expect to use these pipes for free is nuts!” For the first time, Whitacre was talking publicly about charging the Internet companies a fee to reach an SBC customer. And if Google or Yahoo didn’t pay up, he implied, they would presumably find their Web sites more difficult to reach.

Clark notes that Silicon Valley companies, which had supported the phone companies in their earlier battles with the cable TV industry over video delivery, felt Whitacre’s remarks amounted to a betrayal – which led AT&T to attempt a retraction.

Officials at AT&T, which Whitacre now headed as CEO of a newly merged company, tried to backtrack. They said that Whitacre had been referring to the non-Internet portion of the company’s fiber network. But the damage had been done. Whitacre’s comments, and similar ones by other top telecom executives, transformed the debate. “But for those statements,” said a top technology lobbyist, “this debate would never have reached the fever pitch it has now.”

Now, Whitacre undoubtedly drew far more attention to AT&T’s plans than the company really wanted. But it’s ludicrous for companies and lobbyists to attempt to brush off the whole net neutrality debate as an overreaction to a few incautious remarks.

In fact, Cisco Systems and other providers of Internet infrastructure equipment have long been thinking about how to reconfigure the Internet to create more revenue opportunities for their customers, many of whom are major Internet service providers.

Witness this remarkably frank passage from an April 2005 Cisco white paper* about the company’s “Service Exchange Framework” (SEF), a system intended to give network operators more control over who uses their networks – and how much they pay:

Transport networks can be viewed as a highway, where users are fundamentally accessing a high-speed network through a variety of data on-ramps. The Cisco SEF is critical to moving from a data highway to a data toll way - in other words, moving from a basic “highway” service structure to a “toll-way” service structure that allows service providers to reap the benefits of their infrastructure investment by establishing more granular levels of visibility and control over subscriber access, usage, and location…The ability to identify subscribers and classify applications on the IP network helps ensure that services such as VoIP, video on demand, an interactive gaming can be prioritized to meet application metrics differentiating them from current capabilities of “best-effort” networks, and thereby helping ensure price premiums.

Of course, Cisco wants to sell the networking hardware and software required to bring about this vision.

Telecommunications companies and their suppliers have been nursing dreams of a more flexible Internet – one flexible enough to allow tiered pricing – for years. Whitacre’s only indiscretion was to make these ambitions so starkly public that they couldn’t be swept back under the rug.

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